What Happens When you Put your House in a Trust?

A common question I get is: "If I put my house in a trust... do I still own it?"

The short answer is yes.

When you transfer your home into your revocable living trust, you're not giving it away. Instead of owning it as an individual, your trust becomes the legal owner—and because you are typically the trustee of your own trust, you still have full control.

This means you can:

• Live in your home.

• Remodel it.

• Refinance it.

• Sell it whenever you choose.

• Buy a new home and place that in your trust too.

From your day-to-day perspective, very little changes. You're just changing how you hold title to the property.

So what's the point in putting your home into a trust?

Putting your house into a trust changes almost nothing for you, but it can change everything for your family.

Depending on your family dynamics and your goals, having a trust own your house when you pass away can make the process much more simple.

For example, if Pat wants her husband Sam to be able to live in her house when she passes away for as long as he wants, but - when he dies - Pat wants the house to go to her children from a prior relationship, then having the house in a trust makes this plan much easier. The ownership is clear. The rules for how long Sam gets to live there are clear.

This is a great tool for Pat to ensure Sam does not get booted out of the house, and also to ensure her children do not get disinherited by Sam. Rather than give the house to Sam and cross her fingers, Pat can simply put her house in her trust and direct what happens.

Remember that people pass away, but the trust lives on after you die. If your home is titled in your trust when you pass away, your successor trustee will come into power. Whatever is owned by the trust would continue to be owned by the trust. Your successor trustee can carry out your wishes without going through probate. That often means less delay, less expense, and more privacy.

A trust doesn't create a bubble around your home.

There's a common misconception that putting your house into a trust protects it from lawsuits, creditors, nursing home costs, or taxes. For a typical revocable living trust, that's generally not true.

You still receive the same property tax exemptions, your mortgage stays the same, your homeowner's insurance remains in place (be sure to add your trust as an additional insured), and your income taxes don't change simply because the home is in your trust.

A revocable trust is primarily an estate planning tool. It provides asset protection in the context of family drama - Sam cannot disinherit Pat's kids - the assets are protected for Sam to use, then ultimately go to Pat's kids.

But it does not provide asset protection from your creditors. Your creditors can still reach the assets in your revocable living trust.

To be clear, the rules on this are different for an irrevocable trust.

The Biggest Pitfall with Trusts:

Creating the perfect trust... but never transferring your assets into it.

A trust only controls what it owns.

This happens more often than you would think. Someone signs all of the trust documents, places the binder on a shelf, and assumes everything is good to go.

Years later, their family discovers the assets are not actually owned by the trust. The result? The property may still have to go through probate.

This is common when a house is sold and the sale proceeds get put into an account outside the trust.

Or when a new house is purchased, but it is not titled in the name of the trust.

Bottom Line:

A trust doesn't mean you give up your home. It means you're making it easier for the people you love to handle your affairs when the time comes.

If you already have a trust, it's worth taking a few minutes to confirm that your home—and any other major assets—are actually titled in the name of the trust. That simple step can make all the difference.

Please note, careful consideration should be made when using this gifting strategy as there are many other types of taxes that could be implicated. Make sure you are using a trusted advisor.

Schedule Your Consultation and take the first step toward creating a complete estate plan that protects what matters most to you and your loved ones.